The GBPUSD peaked at 1.5266 on 26 March, against our breakeven of 1.5110, a very good 156bps unrealized trading profit.
However, the spot rate has since trended back downwards to the current level of 1.5147, a miserable 37bps unrealized trading profit.
Our mistake was not closing the position by selling the option earlier. Nonetheless, we still have time before the option expires.
I believe the GBP will benefit somewhat from the mess and chaos in the Eurozone. Let’s see.
The current spot rate at 1.0434 is lower than the high reached on 26 March at 1.0495. At the current spot rate, we have an unrealized trading profit of 69bps, not bad, however, we still have time before the option expires in two weeks time.
With all the uncertainly in the United States and Europe, I believe AUD will end up being the safe haven currency, therefore, it should benefit from further upside.
We executed a one month call option on the GBPUSD at the strike of 1.5000, breakeven at 1.5110, cost of premium was 110bps and spot rate was 1.4922.
We were correct on our technical analysis about the breakout. It happened both from the technical viewpoint and also from the poor political sentiment in the Eurozone and Cyprus.
At the time of the earlier post, the spot rate was at 1.2840 and after the breakout, it reached a low of 1.2749 at 10pm Singapore time. Since then, it has recovered and is presently sitting around the 1.2788 level.
The Hourly chart shows another potential breakout with the current spot trend on the upper band of the bollinger bands. The critical German unemployment rate at 4:55pm Singapore time will the catalyst for the breakout.
Employment still bad in Germany and we suspect that the unemployment rate will come in worse than the forecasted -2.
Daily chart shows that the lowest point occured on 24 July 2012 at 1.2041 and the recent peak was on 1 February 2013 at 1.3709.
It appears that the Euro is basing or trying to find a base with a possible downside risk. However, downside risk is mitigated by a rising ichimoku cloud, though the spot rate is currently trading below the cloud.
Trend is also near the bottom band of the bollinger bands.
Hourly chart shows that there is an impending breakout based on the squeezing of the bollinger bands. Question is when it breaks out, is it going to break upwards or break downwards. This will depend on the upcoming economic data and the political scene in the Eurozone. The Cyprus fiasco is by no means the end of the story, the resolution was a stop gap measure to avoid a disaster.
We executed a 1 month call option; strike at 1.3100, spot was 1.3004, breakeven at 1.3181, premium cost was 81bps.
We executed a 1 month call option; strike at 1.0300, spot at 1.0283, breakven at 1.0365, cost of premium was 65bps.
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The Panthenon Investment Group 